Yes, the bulls still have it by a small margin and not because of any sartorial elegance such as that we alluded to last week. Fact is, there still appears to be a cluster of buyers just under the market who continue to exhibit an eagerness to buy on pullbacks. As a consequence, while the short-term trend continues to remain somewhat in doubt, the larger intermediate Cycle is positive as is the Major Cycle.

With the Dow Jones Industrial Average now flirting with new all-time highs after coming within range of the October 9, 2007 close (14164.53) via intraday action to 14149.15 last Thursday, the savoring of blue chips seems to persist. But the Dow was still shy of that all-time close last Friday by 74.87 points and the October 11, 2007 intraday high (14198.10) by 108.44.

Market Overview – What We Know:

Major indexes were slightly higher last week with sole detractor evident in marginally negative Value Line index.

Trading volume rose 18.6% compared to previous week, but that is only because previous week was truncated with only four sessions due to holiday.

Confirming that action short-term Momentum is positive in only Dow 30.

Minor Cycle stats remain toward “Neutral” while intermediate readings are “Overbought” as are Major Cycle statistics.

To suggest positive near-term trend, S&P must rally back above upper edge of 10-Day Price Channel (1522.69 through Monday) and must surpass 1530.94 at most recent high to underscore resumption of larger Intermediate Cycle. Intermediate Cycle turns negative below lower edge of 10-Week Price Channel (1447.88 through March 8).

Daily MAAD recovered some of recent short-term losses last week, but remains below short-term high reached February 19. Daily MAAD Ratio was last “Neutral” at .95.

Daily CPFL remains just below new short-term high reached February 19 and was marginally “Overbought” at 1.32.

Cumulative Volume (CV) continues to mimic price action in cash S&P, but is still lagging in S&P 500 Eminis. On longer-term basis, CV in S&P 500, NASDAQ Composite, and Dow 30 has only recovered about 50% of losses since October 2007.

There is also a larger problem with Dow 30 strength. In addition to the fact none of the other major indexes have confirmed that positive flavor in the Dow, Cumulative Volume (CV) in the bellwether 30 is nowhere near making new all-time highs. In fact, like the S&P 500 and the NASDAQ Composite, CV in the Dow has only been able to retrace about 50% of its losses in the wake of the October 2007 highs. Is that upside failure in CV since the March 2009 lows a reason for long-term concern? Yes it is, given the fact Intermediate Cycle statistics remain just as “Overbought” in the Dow as in the other major indexes.

So, should resilience in the Dow 30 be regarded as a harbinger of higher prices in the other major indexes, or should it be viewed as an end game from the old “quality is the last to go” school of market analysis?

Market Overview – What We Think:

Despite short-term selling week ending February 22 and modest recovery since then, short-term trend remains in doubt to extent S&P 500, NASDAQ Composite, and Value Line index continue to exhibit negative bias while only Dow 30 has more positive flavor.

Short-term trend could easily slip back into negative territory. Such action would then have impact on larger Intermediate Cycle that remains positive, but “Overbought.”

Weakness on short-term trend overlapping and affecting Intermediate Cycle would then put in jeopardy uptrend in effect since last November.

Nonetheless, lacking downside resolution on near term and fact intermediate trend remains positive, albeit tentatively, we cannot preclude possibility current near-term pullback could be developing within context of still positive intermediate advance and that strength above S&P 500 high on February 19 (1530.945) could occur. Such action would then re-assert Major Cycle uptrend.

What could now be at stake is staying power of long-term advance begun in March 2009.

And so long as pricing and indicators are not in synch on upside as they were from March 2009 until May 2011, lingering doubts will persist about long-term viability of bull trend and we will continue to wonder how much longer this market will be able to shake off unfavorable indicator divergences.